Mid-America Apartment Communities, Inc.MAANYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $177.51 per share(market-calibrated)

+32.4%

Upside to Fair Value

Current

$134.11

Pure Model

$186.42

Fair Value

$177.51

Bull Case

$226.15

Bear Case

$151.23

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

2.00%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $186.42.

What's Driving This Ratingfor MAA

↓

CapEx normalizing toward maintenance

Historical CapEx is 16.58% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$365M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 35.55% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 1.93% in Year 1 to -1.68% by Year 5 (per analyst consensus). That's below the 2.50% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 92.63% indicates efficient cash generation. FCF reaches $1.5B by Year 10 (56.87% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.78

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.02%

Cost of Debt

Pre-tax Cost of Debt3.01%

Tax Rate5.00%

After-tax Cost of Debt2.86%

Equity Weight (E/V)74.38%

Debt Weight (D/V)25.62%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (74.38% × 8.02%) + (25.62% × 2.86%)

= 6.70%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.3B	$2.5B	$2.5B	$2.5B	$2.6B
EBIT	$801M	$884M	$885M	$877M	$922M
Tax	$40M	$44M	$44M	$44M	$46M
NOPAT	$761M	$840M	$841M	$833M	$876M
+ Depreciation	$582M	$642M	$643M	$638M	$670M
- Capex	$373M	$334M	$257M	$178M	$65M
- Δ NWC	$4M	$16M	-$4M	-$18,655.483	$6M
Free Cash Flow	$965M	$1.1B	$1.2B	$1.3B	$1.5B
Discount Factor	0.937	0.823	0.723	0.635	0.523
Present Value	$904M	$932M	$890M	$822M	$771M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.5B

Terminal Growth Rate2.50%

WACC6.70%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$36.0B

PV of Terminal Value$18.8B

Exit Multiple Method

Year 10 EBITDA$1.6B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$35.0B

PV of Terminal Value$18.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.6B

PV of Terminal Value$18.8B

Enterprise Value$27.4B

(-) Net Debt$5.3B

Equity Value$22.1B

Shares Outstanding117M

Price per Share$188.62

Exit Multiple Method

PV of Projected FCFs$8.6B

PV of Terminal Value$18.3B

Enterprise Value$26.9B

(-) Net Debt$5.3B

Equity Value$21.6B

Shares Outstanding117M

Price per Share$184.22

Pure Model Fair Value

$186.42

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.70%	$256.53	$280.69	$315.85	$325.44	$310.82
5.70%	$205.03	$217.36	$233.54	$255.72	$287.99
6.70%	$170.31	$177.51	$186.42	$197.75	$212.61
7.70%	$144.62	$149.20	$154.65	$161.27	$169.47
8.70%	$124.48	$127.56	$131.14	$135.36	$140.38

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$151.23

12.8% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.98

Base Case

$186.42

39.0% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.78

Bull Case

$226.15

68.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.66

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth1.93%

Year 3 Revenue Growth6.77%

Year 5 Revenue Growth-1.68%

Year 7 Revenue Growth-0.01%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin35.55%

Tax Rate5.00%

Historical Capex / Rev16.58%

Terminal Capex / Rev2.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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